ESG in Banking: Implementing ESG in a Bank
I was thinking about implementing ESG in a Bank, in particular my Bank. Have you noticed how important sustainable finance and other relevant topics like ESG have become over the last months? ESG in Banking is one of or even the top topic nowadays. Even me, I have already written about it before, here: ESG and its importance for the financial sector.
Have you ever wondered how fit your bank is regarding these topics? If not, I can give you some inputs afterward in a quite structured way.
I was thinking about this for my bank and developed some main factors to consider when benchmarking my bank. Please keep in mind, these are just my humble ideas and not what you will get when you pay for an expensive consultant or consulting company. But you might take these as an introduction to think about implementing ESG in YOUR bank.
ESG in a bank-related context
Framework or Embedding
- Get all the relevant regulations on the national and international levels.
- What is the significance of these regulations for your bank? Take into account national and international regulations (OECD / USA / EU guidelines or standards).
- Get aware of what the fundamentals of Sustainable Finance are.
- What are the most recent international and national developments?
- What are the relevant effects on financial institutions and banks especially?
Challenges in the implementation of ESG requirements by the management of your bank
- Who is responsible for the ESG issue within your bank?
- Where is ESG located within your internal guidelines? The framework of the mission statement, Code of Conduct, Governance, emission requirements, etc.
- How is the ESG topic embedded in stakeholder management?
- What is the significance of the ESG objectives compared to other corporate objectives?
- ESG Initiatives within the bank
- Communication to and about ESG (stakeholder management: content and channel)
Sustainability reporting in particular
- Existence and, if applicable, content and scope of the sustainability report
- Congruence of ESG objectives/impacts with reporting
- Separate reporting vs. reporting as part of the annual report
ESG in an investment-related context
- What are your relevant customer segments (retail, private banking, HNWI/UHNWI, semi-institutional, institutional)?
- What is the importance of ESG in the investment area for your various stakeholders (clients, own investments, employees, regulators, civil society, media, etc.)?
- How is the set-up / how will the set-up be of the integration of ESG into the investment advisory process with clients (in line with investment and investor requirements)?
- What pricing policy in the ESG sector do you want to implement?
- Which range of services do you want to offer concerning ESG (investment products and services)?
- What are your investment philosophies related to ESG (strategic AA, styles, filters and strategies, type of stock selection)?
- Is Impact Investing a relevant topic?
- Which indices, ratings, and taxonomies related to ESG in the investment area are important for your bank?
- Which labels, certificates, awards and stress testing related to ESG in the investment area are relevant for your bank?
- Check market data providers with corresponding offers
- How is your risk management concerning ESG risks in the investment area (customers and banking book) set up?
- What kind of features of ESG reporting in the investment area do you want to have?
- Is the use of new technologies for ESG (Machine Learning Applications) a topic for you?
- Do you / Do you want to work with cooperation partners for ESG in the investment area?
You see, when thinking about ESG in Banking and about implementing ESG in a Bank there is a lot to consider; hopefully, I could give you some hints here with my TheBankerBlog.com.